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Your Local Brokers Baseline Finance
A Term Loan is a lump sum loan provided for a fixed period, repaid over time with scheduled repayments. It’s one of the most common and versatile types of finance, used across:
In essence, a Term Loan offers predictability: set amount, set term, set repayments (subject to no interest rate changes) — making it an ideal choice for structured, long-term plans.
Loan Type
Fixed-term facility with regular repayments
Purpose
Property purchases, business expansion, asset acquisition
Loan Amount
Typically from $100,000 up to $50M+
Loan Term
1–30 years, depending on purpose and lender
Repayment Types
Principal & Interest or Interest-Only (typically 1–5 years interest-only)
Interest Rate Types
Fixed, variable, or split (part-fixed, part-variable)
Security Required
Usually secured against property or business assets
Borrower Types
Companies, Trusts, Individuals
Term loans are the standard choice for purchasing or refinancing commercial properties. Typical applications include:
Buying a warehouse, office suite, medical room, or industrial facility
Acquiring a retail shop (leased or vacant)
Purchasing a mixed-use commercial/residential property
Refinancing to secure better loan terms or rates
Repayments are usually funded by:
Rental income (for investors)
Business revenue (for owner-occupiers)
Principal and Interest Loan
Fixed loan amount with regular principal and interest repayments over the full term of the loan
Interest-Only Loan
Lower repayments for a set period (typically 1 to 5 years) before principal repayments begin
Balloon repayment Loan
Shorter duration term loan with lower repayments and a large lump sum due at the end. Typically, the balloon is renegotiated into a new loan
Split Loan
A portion fixed, a portion variable — offering a balance between stability and flexibility
✅ Predictable repayments making budgeting easier
❌ Less flexibility than revolving facilities (e.g. overdrafts)
✅ Fixed or variable interest rate options
❌ Early repayment penalties may apply on fixed-rate loans
✅ Access to larger funding amounts
❌ Upfront costs (valuations, legal fees) may be higher
✅ Structured to align with asset lifecycles or business cashflows
❌ Strong serviceability needed for approval
✅ Wide lender availability — banks, non-banks, and private lenders
❌ Less suited for very short-term funding needs
Loan Type
Use Case
Flexibility
Documentation Required
Suited For
Term Loan
Long-term asset purchases, business expansion, debt refinancing
Medium
High
Full financials
Businesses with strong B2B receivables
Understanding the finer details of a term loan can help you structure your finance more effectively and avoid unexpected surprises. Here are some key terms and concepts you’ll likely come across when considering or managing a term loan:
Total life of the loan (e.g., 5, 10, or 25 years)
Gradual repayment of loan principal over time
A lump sum repayment due at the end of the loan term
Interest rate stays the same for a set period
Interest rate can move up or down
Financial conditions set by lenders to maintain loan compliance. Common covenants include Interest Cover Ratios and Debt Service Cover Ratios (For more information on covenants, please see the Covenants page).
An asset (like property or business equipment) pledged to the lender as collateral for the loan. If the borrower defaults, the lender can sell the asset to recover the debt.
A legal agreement giving the lender security over all (or most) of a borrower's assets, not just the property funded. Common in business loans and refinances.
A legal promise by an individual (often a company director) to personally repay the loan if the borrowing entity cannot.
The percentage of the loan amount compared to the value of the secured asset. Lower LVRs typically mean lower risk for the lender.
A penalty charged if a borrower pays off their loan earlier than the agreed term, usually applicable to fixed-rate loans.
A higher rate of interest charged if the borrower misses a scheduled repayment or breaches loan terms.
At Baseline Finance, we specialise in finding flexible solutions for commercial borrowers — whether you’re fully documented or not.
The information provided on this site is on the understanding that it is for illustrative and discussion purposes only. Whilst all care and attention is taken in its preparation any party seeking to rely on its content or otherwise should make their own enquiries and research to ensure its relevance to your specific personal and business requirements and circumstances. Terms, conditions, fees and charges may apply. Normal lending criteria apply. Rates subject to change. Approved applicants only.
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